Here's how it works:A homeowner is in dire straits and needs to get rid of his house.

I also want to state that I have done a small project there for a home owner that intended to move forward without the HOA knowing and I did not move forward with them.

In general most homeowners would file for a claim on their own in this situation and the check would be issued in care of the Mortgagee to control the draws for repairs.It is not clear if your borrowers filed for a claim on their insurance for the sinkhole.  

But taxes are about 10-12k per year on this property and the previous homeowner was delinquent for several years)Cash for Keys: $20,000 (The homeowner agreed to vacate by a certain date to avoid a drawn out legal process, which they threatened to do)Cleanout: $750 (The place was a complete mess)Initial Cleaning: $150 (I at least needed to get the place tidied up a bit before painters would come)Kitchen Repainting / Spraying Makeover: $11,500Fresh Paint on Most Rooms (Ceiling, Walls, Trims): $12,500Hardwood Floor (Sand, Stain, Re-finish): $4,500 New Carpets in all 4 bedrooms: $4,500Lawn Debris and Hydroseed: $6,000 (and weekly lawncare until sale but that was cheap)Electrician: $1,000 (Smokes Inspection and fixed a few recessed lights + other minor)HVAC: $1,000 (Garbage Disposal Replacement, HVAC filter replacement + othersWindow Cleaning: $500Mold Remediation: $1,000 (Bathroom Ceiling)Carpentry: $5,000 (Bunch of stuff)Miscellaneous Materials: $2,000Final Cleaning: $300Staging: $4,500New Washer and Dryer: $1,000 Total: ~$600,200 (+- 2-3k)Listed Price: 669,000Sale Price: 644,500 After broker + legal Proceeds: 606,000Profit: ~6k Time Held: Bought in April, Roughly 6 Months.I didn't make much from this deal, but the experience I got was awesome.

Hailing that said the majority of states in the union do not require a home owner to higher a contractor to do work.

The problem is there are a lot of laws around predatory lending that would stop a private investor making a large number of small loans to individual homeowners.

But simultaneously opening new doors (pun intended) for future home owners is a great feeling as well.

@John LindermanOf the $60K expense, $40K was to buy into a private sewer run that had been purchased by the home owners that had been ordered by the city to connect to sewer (the ones that obeyed the city's demand).  

Yesterday they put us on a 20 day hold to get home owners insurance "reviewed".  

HERE they made it the court owners cost to pay these when home owners disappeared and abandoned their junked out trash dumps.